With the results of the 2025 Bihar Assembly Elections coming out, the state's Finance Department is discussing fiscal calculations, as resources will need to be raised to fulfill the promises made in the NDA's manifesto after forming the government. Consequently, the issue of prohibition is once again being discussed.
According to the manifesto's promises, funds will be provided to 7.4 million farmers, Scheduled Caste students, and others. Capital expenditure will also be made for the construction of two greenfield cities (New Patna and Sitapuram) and for agricultural infrastructure.
Discussions are underway to review the prohibition.
With a projected fiscal deficit of 9.2% of the gross state domestic product (GSDP) last year and a budget of 5.3% of the state's GDP this year, there are discussions about reviewing the prohibition imposed by Nitish Kumar in 2016.
The NDA faces challenges.
Reversing or lifting the prohibition will not be easy for the NDA, as it enjoys a strong following among women voters who support prohibition. However, there is immense revenue potential, as the state government earned over ₹3,000 crore annually from liquor sales in 2015-16—more than enough to cover the ₹2,200 crore needed for additional direct transfers to farmers.
At current prices, this amount would be even higher. In any case, the pre-election announcement of ₹10,000 for the 15 million women currently enrolled under the Chief Minister's Women's Employment Scheme will cost ₹15,000 crore.
Furthermore, increasing the monthly pension for 11 million elderly, widows, and disabled people to ₹1,100 will result in an additional expenditure of approximately ₹8,500 crore. Approximately ₹4,000 crore is expected to be provided for free electricity up to 125 units.
The additional expenditure will exceed the ₹28,000 crore already spent on schemes. The NDA manifesto also promises a ₹2,000 aid to Scheduled Caste students studying in colleges and assistance to fishermen.
As a result, it is not possible for Bihar to end the financial year with a budgeted fiscal deficit of 3% of state GDP this year unless it can cut other expenditures or raise resources from new sources. After all, 60% of expenditure is already spent on interest payments, salaries and pensions, and other establishment-related expenses, so options are limited.
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